Summary: Impact Of Fracking
A. IMPACTS OF FRACKING IN TEXAS ECONOMY
1. OIL & GAS
Texas is well know for its oil and gas production it produces 29 percent of America’s natural gas and 1.7 million barrels of oil a day. Making it the largest producer of gas and oil among all states. Texas is also home to the largest oil field in the country, Eagle Ford Formation; it produces over 1 million barrels of oil per day accounting for more than 50% of the state’s oil production.
2. JOB PRODUCTION
Around 1.9 million jobs are supported by the oil and gas industry in Texas, which represents 13.9% of the total state’s workforce.
3. TAX PAYMENT
Oil and gas interests pay over 10 billion dollars annually in taxes just in Texas. The income tax for oil and gas are estimated to be $2.1 billion and $1.5 …show more content…
Companies in these sectors have benefited from the low gas prices, which they use as a source of electricity generation and as a feedstock.
C. IMPACT OF FRACKING IN THE WORLD ECONOMY
1. COLLAPSE OF OIL PRICES
At the beginning of 2014, oil was trading well above $100 per barrel. In January 2016 US Oil was trading at 26 dollars a barrel. Historically major oil price declines are driven by central bank policy errors that led to global economic recessions. During an economic recession, the world activity reduces causing the oil demand to reduce.
The current oil price decline is not a cause of a decline in oil demand instead it is driven by an increase in supply.
Due to the fracking technology oil production in the United States and Canada is surpassing production in Saudi Arabia. In 2014 when Saudi Arabia announced they were not cutting down their production to maintain high oil prices. Market activity plunged oil prices.
2. ECONOMIC IMPACT OF LOW OIL